Exxon keen on Reliance blocks

Exxon-Mobil Corp, the world's largest publicly traded oil company, is keen on acquiring a stake in Reliance Industries' D6 block in the Krishna-Godavari basin in the Bay of Bengal, where 14 trillion cubic feet of gas reserves have been discovered.

Exxon-Mobil, the world's largest and most profitable private producer of oil and gas, held preliminary talks with senior Reliance executives on taking a 50 per cent stake and operatorship in KG-DWN-98/3 (KG-D6) block, industry sources said.

"Reliance Industries has received and continues to receive expressions of interest from many international companies for a possible participation in its Indian blocks. However, we cannot comment on any specific proposal at this juncture," a company spokesperson said from Mumbai.

Sources said Reliance was on the lookout for deep-sea gas exploitation technology and was considering bringing in an experienced global upstream major for the purpose.

Reliance is racing against time to begin natural gas production from the field by 2007-08, the time it has given for beginning supplies to its first customer, NTPC.

Reliance, which had secured directorate general of hydrocarbon's approval for a 2.39-billion dollar development plan for two gas fields in KG-D6 block on March 9, floated an international tender for risk, reliability and availability studies for developing of KG-DWN-98/3 block.

Exxon-Mobil was introduced to Reliance by Atul Chandra, former managing director of the ONGC Videsh Ltd. Chandra, now scouting for overseas business for Reliance, was also responsible for OVL securing a 20 per cent stake in the Exxonmobil-operated Sakhalin-1 oil and gas project in Russia.

Sources said Exxonmobil, which has operations in North America, South America, Europe, Asia, Australia, the Middle East, the Caspian and Africa, was keen on getting into a proven oil/gas fields in South Asia.

Reliance Industries, which has so far made 12 gas finds in the KG-D6 block, plans to invest $2390.4 million in developing the Dhirubhai-1 and Dhirubhai-3 gas fields, which will produce 40 million standard cubic meters of natural gas per day from 2007.

Reliance, as the operator of the block, holds a 90 per cent interest and Niko Resources of Canada acquires the remaining 10 per cent.

"The original gas-in-place (OGIP) for Dhirubhai 1 and Dhirubhai 3 as per RIL's in-house studies is estimated to be 8.3 trillion cubic feet," according to the company's plan.

The proposed initial development covers only 4.5 per cent of the total block area (7645 sq Km). "Considerable upside potential exists in the form of already known discoveries such as Dhirubhai 2, 4, 5 and 6 and other possible discoveries from the large area of the block yet unexplored."